Monday, September 5, 2011

Cuba Chases 5 Billion Barrels of Undiscovered Oil; U.S. Intervenes

William PentlandForbes, September 4, 2011

The island nation of Cuba is scrambling to secure access to what it believe to be about 5 billion barrels of oil lying deep under the ocean off its northern coast. A massive drilling rig is en route to Cuba and plans to start drilling in a matter of months. Meanwhile, the United States government is sufficiently concerned about the risks of another oil spill that is dispatching a group of quasi-diplomats to Cuba on a fact-finding mission as early as tomorrow, according to reports in Dow Jones. U.S. officials believe Cuba’s waters could contain more than 5 billion barrels of undiscovered oil. Cuba will begin a plan to tap its offshore oil later this year, when a consortium led by Spanish company Repsol YPF S.A. plans to start drilling a well in more than 5,500 feet of water off the country’s northern coast, which will likely trigger a race to set up production in Cuban waters, presuming Repsol finds oil.

If oil is discovered, Cuba will reduce its reliance on Venezuela for its energy needs. In 2009, Cuba produced roughly 50,000 barrels of oil a day from onshore and coastal wells and relied on imports from Venezuela to supply an additional 130,000 barrels to meet consumption levels, according to the U.S. Energy Information Administration. Repsol will be drilling in waters that are deeper than those in which the Deepwater Horizon rig operated at the time it exploded last year. Repsol will be using a Chinese-built drilling rig that only recently left Singapore for Cuban waters. The rig, known as Scarabeo 9, is expected to arrive in November or December. Scarabeo 9 is a semi-submersible drilling vessel recently built by Yantai Raffles, which will be on contract by Repsol YPF for deepwater exploratory drilling off Cuba.

In response to Cuba’s drilling plans, the U.S. is sending a delegation led by Bill Reilly, co-chief of the Deepwater Horizon oil spill commission, to Cuba next week to help evaluate that country’s plans for developing its oil resources, according to reports by Dow Jones. The delegation will be on a fact-finding mission to determine the country’s long-term plans for pursuing its oil resources and identify steps to ensure safety and environmental protection.